Compromise Is Reached on Energy Refunds

Legislature will have oversight of Lockyer's use of electricity firm payments. Republicans oppose using funds to bridge the budget gap.

SACRAMENTO -- Legislative budget writers and the attorney general on Wednesday resolved a tussle over who should control hundreds of millions of dollars in anticipated electricity company refunds, but Senate Republicans say the agreement still doesn't get the money to the most deserving people -- utility customers.

The agreement gives the Legislature oversight of whatever money Atty. Gen. Bill Lockyer wins from energy companies settling accusations of misdeeds during the electricity crisis of 2000 and 2001.

It makes a priority of reducing costs for the three-quarters of California residents served by Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric.

But Senate Republicans want specific language guaranteeing that the money will be used to either cut the electricity rates of those utility customers or to more quickly pay off nearly $12 billion borrowed last year to fill the financial hole dug by the electricity crisis. Utility customers must pay off that debt over the next 20 years through their monthly bills.

Republican senators expressed frustration that only a small amount of the $2.1 billion won by Lockyer in settlements with energy companies has gone to ratepayers. Without legislative oversight, Lockyer dedicated tens of millions in settlement dollars to retrofitting public schools with solar panels, paying his office's investigative costs and giving cities and water districts money to install energy-saving equipment.

"Ratepayers deserve relief from high electricity rates," states a letter signed by all 15 Senate Republicans. It was sent Wednesday to budget committee chairs Assemblywoman Jenny Oropeza (D-Long Beach) and Sen. Wes Chesbro (D-Arcata).

The energy crisis lasted from May 2000 to June 2001 and involved blackouts, price spikes and the bankruptcy of PG&E.

Lockyer accused dozens of energy companies of violating California's business practice codes during the crisis, and he has struck settlements with companies including Calpine, Constellation Power Source and Williams Cos. Negotiations with other companies continue.

Starting early this year, lawmakers wrestling with a budget shortfall now pegged at $38 billion began eyeing Lockyer's settlements as a possible revenue source.

A dispute over the attorney general's authority to dictate settlements ensued, leading to this week's agreement.

The compromise language gives ratepayers priority to get the money. But it also allows lawmakers to use the money for "any other purpose determined by the Legislature to benefit ratepayers."

Sen. Chuck Poochigian (R-Fresno) said he fears the Legislature could take the money to ease the budget crisis. He has written a resolution, yet to be considered in the Senate, urging that settlement money be used "solely" to provide relief to utility customers, not taxpayers at large.

"I just think that everyone who's involved in securing refunds or settlement monies in connection to the energy crisis ought to be focused on getting the money restored to the people who paid the bills," Poochigian said.

"I'm disturbed and disappointed that there's an effort to have that money go elsewhere, including to the general fund of the state of California."

The bill language that frustrates Senate Republicans won't become law until a budget is adopted. Lawmakers are deadlocked on a budget and are unlikely to meet a June 15 constitutional deadline.

Lockyer spokesman Tom Dresslar said, "We're pleased we resolved this issue with the budget committees of the Legislature and we believe that the agreement -- rather than have the Legislature dictate to the attorney general how he settles energy cases -- instead provides direction and states what the Legislature's priorities are."

He added: "We have no doubt that our previous settlements have benefited ratepayers and taxpayers."

The budget language would not apply to the $9 billion sought by Gov. Gray Davis as a refund from electricity sellers that allegedly overcharged California utilities. The Federal Energy Regulatory Commission has yet to order refunds in that case.